REG - Dr. Martens PLC - Half-year Report
30/11/2023 07:15
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RNS Number : 1350V Dr. Martens PLC 30 November 2023
30 November 2023
Dr. Martens plc
First half results for the six months to 30 September 2023
Strategic progress despite challenging USA backdrop
"We saw a mixed trading performance in the first half of the year. We made
good progress with our strategic priorities, continuing to invest in the
business and our people to drive sustainable long-term growth. During the
period we focused on controlling the controllables: we delivered significant
supply chain savings, successfully transformed our North America distribution
network, opened 25 new stores, and launched a Dr. Martens UK repair service.
The DOCS strategy of brand control and prioritising more profitable sales via
our own stores and websites continued to deliver, with Direct to Consumer
("DTC") revenues up 11% in constant currency, representing half of Group
revenues.
We saw a continued strong DTC performance in EMEA and APAC. In the USA, where
there is an increasingly difficult consumer environment, our results have been
more challenged, led by weakness in wholesale. We have strengthened the
Americas leadership team and they are taking action, including refocusing
marketing and improving our ecommerce trading capabilities. It is likely,
however, that given the challenging backdrop it will take longer to see an
improvement in USA results than initially anticipated. Notwithstanding the
clear challenges we face in the USA market we remain very confident in our
iconic brand and the significant growth opportunity ahead of us.
I am delighted that I'll be joined by Giles Wilson as Chief Financial Officer
and Ije Nwokorie as Chief Brand Officer in the new year, bolstering our
leadership team. I would like to take this opportunity to thank the dedicated
and passionate people of Dr. Martens for their exceptional hard work in H1 and
their continued support as we enter the busiest period of the year."
Kenny Wilson, Chief Executive Officer
£m H124 H123 % change Actual % change CC(2)
Revenue 395.8 418.6 -5% -3%
DTC revenue mix 50% 43% +7%pts
EBITDA(1) 77.6 88.8 -13%
EBITDA margin 19.6% 21.2% -1.6%pts
Profit Before Tax 25.8 57.9 -55%
Profit After Tax 19.0 44.7 -57%
Basic EPS (p) 1.9 4.5 -58%
Dividend per share (p) 1.56 1.56 -
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation and amortisation
2. Constant currency applies the same exchange rate to the FY23
and FY24 results, based on FY23 budgeted rates
· H1 revenue down 5% (3% constant currency (CC)), primarily driven
by weakness in USA wholesale
o DTC revenue up 9% (11% CC) to 50% mix. Retail revenue up 15% (17% CC) and
ecommerce up 3% (5% CC)
o Wholesale revenue impacted by planned strategic decisions to reduce
volumes into EMEA etailers and exit of the China distributor, together with a
weaker USA wholesale performance than previously anticipated
o Regional shape of performance in line with expectations, with good growth
in EMEA (revenue up 9% or 8% CC), a strong performance in Japan DTC (revenue
up 41% CC) and America revenue down 18% (15% CC), driven by wholesale
· New marketing brand platform "Made Strong" launched, with high
impact city activations in New York, London and Tokyo
· 14XX capsule collection unveiled, the first step of a faster pace
of product innovation, driving brand energy. Strong product pipeline for AW24
· Opened 25 new own stores globally
· Successful rollout of omnichannel offer in UK, with positive
initial results. Rollout across core EMEA markets in 2024
· Transformed our North America distribution network with
automation of LA DC, expansion of New Jersey DC and relocation of Canadian DC
to Toronto
· Launched Authorised Repair service to UK consumers in October
· Strategic supply chain savings drove both a gross margin
improvement of 2.8%pts (to 64.4%) and resulted in EBITDA margin performance
ahead of guidance
· Profit before tax was down 55% to £25.8m, reflecting the EBITDA
performance together with higher depreciation and amortisation as a result of
continued investment into IT projects, DCs and new stores
· Interim dividend held flat year-on-year and £50m buyback
programme progressing well
Current trading and guidance
Trading in the second half to date has been mixed, with the start of the
Autumn/Winter season impacted by warm weather across all three regions and
weaker traffic overall. However, in both EMEA and APAC, we have seen improved
trading in more recent weeks. We expect trading for the remainder of the full
year in these two regions to be broadly in line with previous expectations.
In the USA, the consumer environment has become more challenging in recent
months. Although we have seen some encouraging signs in very recent DTC
trading, including over the Black Friday weekend, we expect that it will take
longer to see a material improvement in USA performance than initially
anticipated. The most challenging part within our USA business is wholesale,
with widespread macro-economic caution amongst our wholesale customers
resulting in a weaker order book than in prior years. Wholesale customers have
low in-market inventory levels of our products and therefore we can expect
them to re-order, however the timing and level of these re-orders are
unpredictable, reducing visibility in our wholesale business.
There is a large part of the financial year still ahead of us, however, given
the backdrop, we expect that full year revenue will decline by high
single-digit percentage year-on-year, on a constant currency basis. Assuming
this revenue outturn, we expect FY24 EBITDA to be moderately below the bottom
end of the range of consensus expectations, with PBT also impacted by c.£5m
higher net finance costs in addition to this lower EBITDA *.
Given macro-economic uncertainty, we are withdrawing our previous guidance of
high single-digit revenue growth in FY25. Our medium-term expectations are
unchanged, underpinned by the significant white-space growth opportunity and
our iconic brand and product range.
*Sell-side consensus FY24 EBITDA range £223.7m to £240.0m and PBT range
£128.7m to £148.0m.
Detailed technical guidance is on page 12.
Enquiries
Investors and analysts
Bethany Barnes, Director of Investor Relations
Bethany.Barnes@drmartens.com
+44 7825 187465
Beth Callum, Senior Investor Relations
Analyst
Beth.Callum@drmartens.com
Press
H/Advisors
Maitland
+44 20 7379 5151
Clinton
Manning
+44 7711 972662
Katharine
Spence
+44 7384 535739
Gill Hammond, Director of
Communications
+44 7384 214248
Presentation of interim results
Kenny Wilson, CEO and Jon Mortimore, CFO will be presenting the H124 results
at 09:30 (UK time) on 30 November 2023. The presentation will be streamed live
and the link to join is https://www.drmartensplc.com
(https://www.drmartensplc.com) . A playback of the presentation will be
available on our corporate website after the event, at
https://www.drmartensplc.com/investors/results-centre
(https://www.drmartensplc.com/investors/results-centre) .
About Dr. Martens
Dr. Martens is an iconic British brand founded in 1960 in Northamptonshire.
Produced originally for workers looking for tough, durable boots, the brand
was quickly adopted by diverse youth subcultures and associated musical
movements. Dr. Martens has since transcended its working-class roots while
still celebrating its proud heritage and, six decades later, "Docs" or "DM's"
are worn by people around the world who use them as a symbol of empowerment
and their own individual attitude. The Company listed on the main market of
the London Stock Exchange on 29 January 2021 (DOCS.L) and is a constituent of
the FTSE 250 index.
Cautionary statement relating to forward-looking statements
Announcements, presentations to investors, or other documents or reports filed
with or furnished to the London Stock Exchange (LSE) and any other written
information released, or oral statements made, to the public in the future by
or on behalf of Dr. Martens plc and it group companies ("the Group"), may
contain forward-looking statements.
Forward-looking statements give the Group's current expectations or forecasts
of future events. An investor can identify these statements by the fact that
they do not relate strictly to historical or current facts. They use words
such as 'aim', 'ambition', 'anticipate', 'estimate', 'expect', 'intend',
'will', 'project', 'plan', 'believe', 'target' and other words and terms of
similar meaning in connection with any discussion of future operating or
financial performance. In particular, these include statements relating to
future actions, future performance or results of current and anticipated
products, expenses, the outcome of contingencies such as legal proceedings,
dividend payments and financial results. Other than in accordance with its
legal or regulatory obligations (including under the Market Abuse Regulation,
the UK Listing Rules and the Disclosure and Transparency Rules of the
Financial Conduct Authority), the Group undertakes no obligation to update any
forward-looking statements, whether as a result of new information, future
events or otherwise. The reader should, however, consult any additional
disclosures that the Group may make in any documents which it publishes and/or
files with the LSE. All readers, wherever located, should take note of these
disclosures. Accordingly, no assurance can be given that any particular
expectation will be met and investors are cautioned not to place undue
reliance on the forward-looking statements.
Forward-looking statements are subject to assumptions, inherent risks and
uncertainties, many of which relate to factors that are beyond the Group's
control or precise estimate. The Group cautions investors that a number of
important factors, including those referred to in this document, could cause
actual results to differ materially from those expressed or implied in any
forward-looking statement. Any forward-looking statements made by or on behalf
of the Group speak only as of the date they are made and are based upon the
knowledge and information available to the Directors on the date of this
report.
BUSINESS REVIEW
We achieved a lot in the first half of FY24 and our DOCS strategy continues to
drive results. We delivered a good performance in EMEA, with growth
well-balanced across our home UK market and our core continental Europe
markets, as we continue to benefit from the multi-year growth opportunity from
converting markets from distributor to directly-operated. In APAC, Japan
accounts for the vast majority of our profits and here we saw a strong DTC
performance, following the successful integration of the recently transferred
14 Japanese franchise stores.
At our full year results in June, we discussed the execution issues that had
impacted our FY23 USA performance, and the actions that the new Americas
leadership team were taking to address these. Since then, those actions have
been completed, and the team have refocused the marketing plan and better
allocated spend to ensure boots messaging is at the core. While it is still
early days, reaction to our New York launch of the Made Strong brand platform
and 14XX collection were very encouraging. We have also implemented a number
of website upgrades, the majority of which went live on 1(st) November. Again,
there is more to come but this was an important step in improving our website
trading capability.
Over recent months, however, the consumer environment in the USA has evolved
and become more challenging. We are seeing a weaker boots market in the USA
overall, which is exacerbating the macro-economic factors. We have also had to
contend with warm weather in October, impacting the Autumn/Winter season. Our
busiest period is still ahead of us and we will continue to take action to
reignite the USA boots category and meet the challenge of the prevailing
conditions.
Our USA wholesale business was impacted both by the planned reduction of
orders to two large USA customers, together with deeper inventory destocking
than previously anticipated across our customer base, driven by macro-economic
uncertainty. Throughout, we have adopted a long-term mindset, ensuring that
the wholesale channel inventory position is managed down in line with sales.
At the end of October, the average inventory position of our top ten USA
wholesale customers was down 20%. It is clear in customer interactions that
this inventory destocking is widespread across the industry.
We were pleased to recently announce the appointment of Giles Wilson as CFO
and Ije Nwokorie as Chief Brand Officer (CBO). Giles has significant listed
company experience and will join in 2024 (date to be confirmed) to replace Jon
Mortimore who is retiring, as previously announced. The creation of a CBO role
is an important step in our journey to become a £2bn revenue brand. Ije
Nwokorie, who has served as a Non-Executive Director since IPO, will be
stepping down from the Board and joining as CBO in February. He joins from
Apple Inc, where he has been Senior Director, Apple Retail, since January
2018. He will oversee the Global Marketing, Product and Strategy functions and
will be responsible for setting the overall brand strategy, vision and
direction.
We launched our new marketing brand platform, 'Made Strong', in October, with
very encouraging initial feedback. Made Strong brings our brand purpose to
life for today's wearers, reframing our role as a catalyst to empower
rebellious self-expression. During the launch, we held a number of high impact
city activations across London, New York and Tokyo. The launch saw strong
engagement on social media channels and drove a step forward in earned PR
coverage.
Our product strategy is centered on 'icons and innovation', meaning that we
aim to grow revenue of our iconic continuity products through constant
innovation around this core, to drive brand heat and newness. We aim to grow
all three categories of boots, shoes and sandals simultaneously. Overall,
pairs were down 9%, however this was predominantly due to the reduction in the
wholesale business. Total DTC pairs, a far more relevant metric, was up 12%.
All three categories saw DTC volume growth, with sandals up 8%, shoes up 26%
and boots up 6%.
Alongside the launch of Made Strong, we launched a capsule collection of our
new Amp category: 14XX. Amp and 14XX represent the pinnacle of our creative
expression, with cutting-edge innovation at the forefront while still
remaining true to our product handwriting and design principles of durability
and versatility. The capsule collection is made of up three new products,
built around our original 1460 boot, 1461 shoe and 2976 Chelsea boot. In
Autumn/Winter 24 we will launch a larger 14XX range to consumers. The purpose
of these collections is to create a 'trickle down' effect, creating demand for
the mainline product range amongst new and existing consumers.
Collaborations play a crucial role in our product strategy, creating energy
and buzz while being an incubator for future product success. We had a number
of successful collaborations in Spring/Summer 23, including A-COLD-WALL*,
Wacko Maria and BT21 XXXXX. In 2023 we are celebrating 10 years of the Jadon,
our biggest product within our Fusion category and one of our four icon
products, with a sell-out collaboration with Marc Jacobs. Since September,
we've launched our first collaboration with Denim Tears using the 1460 boot
and penton loafer silhouettes as the canvas, as well as highly successful
collaborations with Supreme, Warner Bros. and Born X Raised, all of which
signify big cultural brand moments.
During the half we completed the transformation of our North American
distribution network, with automated picking implemented in our LA DC, a
significant expansion of our New Jersey DC, enabling picking for all three
channels, and the opening of a new DC in Toronto, moving from our previous
west-coast Canadian facility, with the new facility servicing both wholesale
and DTC orders. This new North American DC network improves both distribution
costs and delivery speeds.
We achieved significant supply chain savings in the half. This is as a result
of the transformation we have been executing in the supply chain over recent
years, steadily increasing direct control over our supply chain inputs from
c.10% five years ago to c.70% control today. This has enabled improved quality
and consistency, diversification of risk from single point dependency and
direct negotiation of costs. The savings delivered in the half as a result of
this strategy include lower costs for leather (due to competition between
tanneries), factory benchmarking to align profit, re-negotiation of our
inbound shipping contract and optimisation and re-tender of retail outbound
freight. This also enabled us to directly benefit from weaker macro demand for
raw materials and lower global freight costs.
We have a number of significant technology projects underway, which will drive
efficiency savings and underpin future growth. We have now implemented an
order management system ("OMS") in EMEA and at the end of FY23 we started a
trial of omnichannel offerings, 'click and collect', 'ecom return to store'
and 'store stock look-up' in the UK. Following this successful trial, we
rolled these services out across UK stores in August and September, with
positive initial results. For instance, repurchase following a return in-store
is approximately double the ecommerce rate. We intend to roll out these
omnichannel services across the rest of our core EMEA markets in 2024,
starting with Germany. In Japan we began trialling virtual sizing
functionality and expanded staff recommendations on-line.
We have also begun work to build a Customer Data Platform which will give us a
single view of the consumer across both DTC channels. This will allow us to
drive more consumer-first initiatives, a key pillar of our DOCS strategy. In
supply chain, we have commenced the project to implement a modern supply and
demand planning system, which is so far progressing well. This will drive
working capital savings from FY26 onwards and improve availability and
accuracy of product forecasting.
Finally, we made good progress on our sustainability agenda. Our Science Based
Targets were verified and approved by the Science Based Target Initiative in
October. We have committed to reducing our absolute greenhouse gas emissions
aligned with the Science Based Targets initiative to achieve near-term
reduction targets by 2030 and Net Zero by 2040. In October we launched our
Authorised Repair service to consumers in the UK. The service enables
consumers to repair their Dr. Martens products, working with a third-party
repair partner and using our own machines and materials. Whilst early days, we
are pleased with initial consumer reaction and will look to roll this out in
our other key markets in the future. Work on launching our own resale trial in
the USA, named ReWair, is ongoing and we expect to launch this during 2024.
FINANCE REVIEW
Total revenue declined 5% (3% CC) with growth in DTC offset by weaker
wholesale revenues. EBITDA was £77.6m, 13% lower than last year, with margins
1.6%pts lower at 19.6%. The first half of the financial year is typically a
lower margin period due to higher margin DTC trading being weighted to the
second half. Profit before tax was £25.8m (H1 FY23: £57.9m), down 55%,
reflecting lower EBITDA, increased depreciation and amortisation charges and
higher rate-led interest costs.
As described in the outlook, there is considerable macroeconomic uncertainty.
However, we remain confident in our long-term growth prospects and the cash
generative nature of the business. The balance sheet is strong. As a result,
the Board has maintained the interim dividend at 1.56p, in line with H1 last
year.
£m (unaudited) H1 FY24 H1 FY23 % change % change
Actual CC(4)
Revenue Ecommerce 91.7 88.8 3% 5%
Retail 104.7 91.0 15% 17%
DTC 196.4 179.8 9% 11%
Wholesale(3) 199.4 238.8 -17% -15%
395.8 418.6 -5% -3%
Gross margin 254.9 257.8 -1%
Opex (177.3) (169.0) -5%
EBITDA(1) 77.6 88.8 -13%
Profit before tax 25.8 57.9 -55%
Earnings per share (p) 1.9 4.5 -58%
Dividend per share (p) 1.56 1.56 -
Key statistics Pairs sold (m) 5.7 6.3 -9%
No. of stores opened(2) 25 21 +4
DTC mix % 50% 43% +7pts
Gross margin % 64.4% 61.6% +2.8pts
EBITDA(1) margin % 19.6% 21.2% -1.6pts
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and impairment.
2. Own stores on streets and malls operated under arm's length
leasehold arrangements.
3. Wholesale revenue including distributor customers.
4. Constant currency applies the same exchange rate to the
FY24 and FY23 non-GBP results, based on FY24 budgeted rates.
5. Alternative Performance Measures are used as we believe
they provide additional useful information on underlying trends.
PERFORMANCE BY CHANNEL
Revenue decreased by 5%, or 3% CC, to £395.8m, with a good DTC performance
offset by a decline in wholesale. Wholesale was impacted both by the planned
strategic decisions to reduce the volume sold into EMEA etailers and cease the
distributor contract in China, and by weaker wholesale in Americas. DTC mix
was up 7%pts to 50% of Group revenues.
Ecommerce revenue grew 3% to £91.7m (5% CC) which represented a revenue mix
of 23%, up 2%pts. We had very strong growth in both EMEA (up 19% CC) and APAC
(up 18% CC), with America down 10%. We saw traffic growth in EMEA and APAC,
whilst in America traffic declined. Ecommerce conversion improved in all three
regions.
Retail revenue grew 15% to £104.7m (17% CC). Growth compared to last year was
led by new and maturing stores (stores opened last year) across all
geographies, with continued footfall recovery in EMEA and APAC, offset by
footfall decline in America. We also benefitted from the transfer of 14 Japan
franchise store at the end of FY23. During the half, we have opened 25 new
stores and closed four stores, to end H1 with 225 own stores.
Wholesale revenue was down 17% to £199.4m (15% CC). As previously announced,
we took three strategic decisions which impacted wholesale revenues this year,
but will create a strong platform for future growth. Firstly, we significantly
reduced the quantity and range of product sold into EMEA etailers, in order to
ensure scarcity of supply in the region and migrate sales to our own websites.
Secondly, we ceased sales to our distributor in China ahead of the contract
ending in June 2023. In the Americas we worked with two large wholesale
accounts who had excess inventory, reducing shipments through the first half
in order to rightsize their inventory positions. In addition to these
strategic decisions, we also saw industry-wide destocking amongst USA
wholesale customers.
The total number of wholesale accounts globally remained broadly flat at 1.9k
after closing c.150 accounts and opening a similar number, as we continued to
elevate distribution of the brand. Total revenues per account declined by 5%,
with growth in EMEA offset by lower revenue per account in America.
PERFORMANCE BY REGION
£m (unaudited) H1 FY24 H1 FY23 % change % change
Actual CC
Revenue: EMEA 194.2 179.0 9% 8%
America 147.7 179.7 -18% -15%
APAC 53.9 59.9 -10% -3%
395.8 418.6 -5% -3%
EBITDA(1): EMEA 55.8 52.8 6%
America 28.6 41.4 -31%
APAC 12.2 13.1 -7%
Support costs(2) (19.0) (18.5) -3%
77.6 88.8 -13%
EBITDA(1) margin by region: EMEA 28.7% 29.5% -0.8pts
America 19.4% 23.0% -3.6pts
APAC 22.6% 21.9% +0.7pts
Total 19.6% 21.2% -1.6pts
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and impairment.
2. Support costs represent group related support costs not
directly attributable to each regions operations and including Group Finance,
Legal, Group HR, Global Brand and Design, Directors and other group only
related costs and expenses.
EMEA revenue grew by 9% to £194.2m (8% CC). DTC grew by 21% (20% CC) with
retail and ecommerce up 22% (21% CC) and 20% (19% CC) respectively. DTC mix
increased by 5%pts. There was good DTC growth in all core markets (UK up 8%,
France up 19%, Germany up 29% and Italy up 62%, all CC). Wholesale was
marginally down as expected, due to the strategic decision to reduce volume to
etailers.
During the first half we opened 11 new stores: four stores in Italy, two
stores in Belgium, two stores in Germany, two stores in UK and our first store
in Denmark. Included in the new store openings were three locations that were
closed and stores relocated to more prominent positions in Belgium and the UK.
EMEA EBITDA was up 6% to £55.8m (H1 FY23: £52.8m), with EBITDA margin 28.7%,
0.8%pts lower than last year, impacted by FX on purchases and the temporary
cost base drag of recently opened stores.
America revenue was down 18% to £147.7m (15% CC). DTC revenue was down 7% (3%
CC) with retail up 5% CC and ecommerce down 10% CC with lower footfall and
traffic in retail and ecommerce respectively, only partly mitigated by new and
maturing stores and better conversion across both channels. DTC mix increased
by 6%pts. Wholesale revenue declined 22% CC, due to both the strategic
decision to manage down inventory of some of our larger wholesale customers,
as well as industry-wide destocking resulting in weak order book momentum. We
maintained a disciplined approach to wholesale, and at the end of October the
average position of our top ten USA wholesale customers was down 20% on the
prior year.
During the first half we opened seven new stores including in LA, Washington
DC, San Antonio and Denver.
America EBITDA was 31% lower at £28.6m with EBITDA margin 3.6%pts lower than
last year, reflecting lower revenue together with incremental inventory
storage costs in LA of £7.0m.
APAC revenue was down 10% to £53.9m (3% CC). We saw lower revenue in China
due to the planned exit of the distributor contract in June, which also drove
APAC wholesale revenue down 29% CC. APAC DTC revenues grew 26% CC, improving
DTC mix by 14%pts, with both retail and ecommerce growing double-digit. This
was led by Japan with DTC revenues up 41% CC following the transfer of 14
franchise stores at the end of FY23.
During the first half we opened seven new stores including three stores in
Shanghai (including one outlet), two in Japan and one in both South Korea and
Hong Kong.
APAC EBITDA was down 7% to £12.2m (H1 FY23: £13.1m) and EBITDA margin up
0.7%pts due to increased mix from Japan (our most profitable market), partly
offset by lower EBITDA in China.
RETAIL STORE ESTATE
During the period, we opened 25 (H1 FY23: 21) new own retail stores (via arm's
length leasehold arrangements) and closed four stores as follows:
31 March 2023 Opened Closed 30 September 2023
EMEA: UK 33 2 (2) 33
Germany 17 2 - 19
France 16 - - 16
Italy 6 4 - 10
Spain 4 - - 4
Other 12 3 (1) 14
88 11 (3) 96
America: 54 7 - 61
APAC: Japan 40 2 - 42
China 5 3 - 8
South Korea 11 1 - 12
Hong Kong 6 1 (1) 6
62 7 (1) 68
Total 204 25 (4) 225
The Group also trades from 26 (FY23: 28) concession counters in department
stores in South Korea and a further 82 (FY23: 119) mono-branded franchise
stores around the world with 15 in China (FY23: 55, the decline being due to
the end of the distribution contract), 16 in Japan (FY23: 16), 21 across
Australia and New Zealand (FY23: 20), 23 across other South East Asia
countries and the balance in the Nordics and Canada (FY23: 21).
QUARTERLY REVENUE PERFORMANCE
Ecommerce revenue was up in Q1 and flat in Q2, in part driven by a stronger
comparative in Q2. In retail, revenue grew double-digit in Q1 and mid-single
digit in Q2, driven by a slowdown in the pace of traffic recovery. Both EMEA
and APAC were impacted by strategic decisions, of reducing EMEA etailer
volumes and ceasing the distributor in China respectively; these were mainly
seen during Q1. In Americas, revenue was down in both quarters as expected,
driven by wholesale.
Year on Year Change (unaudited) Q1 FY24 Q2 FY24 H1 FY24
Actual CC Actual CC Actual CC
Total revenue -11% -11% -2% 1% -5% -3%
Revenue: Ecommerce 7% 7% - 4% 3% 5%
Retail 27% 27% 6% 10% 15% 17%
DTC 17% 17% 3% 7% 9% 11%
Wholesale(1) -41% -41% -5% -2% -17% -15%
Region: EMEA -1% -3% 14% 13% 9% 8%
America -26% -27% -12% -6% -18% -15%
APAC 12% 16% -22% -14% -10% -3%
1. Wholesale revenue including distributor customers.
EBITDA ANALYSIS
Gross margin improved by 2.8%pts to 64.4% as follows:
%pts Increase
Price, net COGS inflation +0.7pts
New & Maturing Stores +1.0pts
Supply chain savings +1.1pts
+2.8pts
In the half, the average price increase was 4.5% and COGS inflation was
approximately 6%, with the incremental margin benefit of +0.7%pts funding all
opex inflation (of around 5%). Supply chain savings in the period were
approximately £10m, improving gross margin by 1.1%pts.
Operating expenses increased by 5% to £177.3m as follows:
Increase/(Decrease)
£m %
New & Maturing Stores 7.3 4%
Marketing Spend (2.2) -1%
Volume & Other (3.8) -2%
Base 1.3 1%
Additional USA storage costs 7.0 -
Increase 8.3 5%
Excluding additional USA storage costs, the cost base increased by 1% with new
store annualisation offset by the timing of the autumn brand marketing
campaign moving from September/October last year to October/November this
year, combined with good cost control across all other categories including
lower volume-related costs and retail outbound freight savings. The additional
USA storage costs of £7.0m were all in relation to temporary space rented in
LA, which will annualise at around £15m, as previously guided.
EBITDA decreased by 13% to £77.6m (H1 FY23: £88.8m) resulting in an EBITDA
margin movement of 1.6%pts to 19.6%.
EBITDA MARGIN % pts YoY
Price net inflation -
New & Maturing Stores(1) -0.9pts
Supply chain savings +1.1pts
Other investments -0.1pts
Base +0.1pts
Additional USA storage costs(2) -1.7pts
Movement -1.6pts
1. Incremental OPEX from new stores net gross margin benefit
from space. During the first half we opened 25 new stores compared to 21 in H1
last year and 31 in H2 in the prior year. In the year of opening, a store
takes approximately six to 12 months to break even EBITDA, as a result a store
opening increases the cost base faster than revenue in the year of the store
opening before positive returns are generated, broadly in year two.
2. Incremental stock holding costs in America.
Before additional USA storage costs, underlying EBITDA margin was marginally
up, driven by the supply chain savings.
Exchange
The profit and loss figures are prepared on an average actual currency basis
for the period. These exchange rates are calculated monthly and applied to
revenue and profits generated in that month, such that the actual figures
translated across the year are dependent upon monthly trading profiles as well
as exchange movement. In addition, all distributor revenues are invoiced in
USD. To aid comparability of underlying performance, we have also calculated
constant currency performance for revenue. This is calculated by translating
non-UK revenues at the same exchange rate year on year.
We have a natural GBP/Euro vs USD hedge. The UK is our second-largest market
after the USA but only comprised 18% of global revenues in H1. Due to our
balanced global trading footprint with 37% of revenues in America and 31% in
Continental Europe, we have a strong natural hedge which protects group EBITDA
should the USD strengthen against GBP and Euro. Approximately 93% of COGS
purchases are paid in USD such that an appreciation of USD compared to GBP and
Euro leads to higher purchase costs in EMEA but is broadly offset by a
corresponding translation benefit from USA derived cash flows, such that USA
revenue and EBITDA is higher and funds lower EMEA EBITDA. This hedge effect
also operates should the USD depreciate against GBP/Euro.
The major exchange rates that impact the Group are £/$, £/€ and £/¥. The
following table summarises average exchange rates used in the year:
£/$ £/€ £/¥
FY24 FY23 % FY24 FY23 % FY24 FY23 %
H1 1.26 1.22 3% 1.16 1.17 -1% 178 163 9%
H2 1.19 1.14 163
FY 1.21 1.16 163
EARNINGS
The following table analyses the results for the year from EBITDA to profit
before tax.
£m (unaudited) H1 FY24 H1 FY23
EBITDA(1) 77.6 88.8
Depreciation and amortisation (37.9) (23.3)
Exchange gains/(losses) 0.6 (0.2)
Net interest cost on bank debt (9.1) (4.7)
Amortisation of loan issue costs/interest on lease liabilities (5.4) (2.7)
Profit before tax 25.8 57.9
Tax (6.8) (13.2)
Earnings 19.0 44.7
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and impairment.
Depreciation and amortisation charged in the period was £37.9m (H1 FY23:
£23.3) with the increase due to the annualisation of new store openings in
prior year, increased DC space in North America and investment in the IT
infrastructure including the implementation of the OMS and omnichannel
capabilities in EMEA.
Profit before tax declined by 55% to £25.8m (H1 FY23: £57.9m) with profit
after tax of £19.0m (H1 FY23: £44.7m). This was primarily due to lower
EBITDA together with higher depreciation and amortisation costs.
Interest costs have increased due to higher interest rates on the bank debt
(being 3.4%pts higher than last year at 6.2%) and a lower average cash
balance.
Depreciation and amortisation charged in the period was £37.9m (H1 FY23:
£23.3m), and is analysed as follows:
£m (unaudited) H1 FY24 H1 FY23
Amortisation of intangibles(1) 4.6 3.4
Depreciation of plant and equipment(2) 7.9 6.3
12.5 9.7
Depreciation of right-of-use assets(3) 25.4 13.6
Total 37.9 23.3
1. Mainly represented by IT related spend with the average term of
3 to 7 years.
2. Mainly represented by new store fit out costs with the average
term of 5 years.
3. Mainly represented by depreciation of IFRS 16 capitalised
leases with the average term of 4.9 years and 301 properties (H1 FY23: 5.4
years and 210 properties).
In the year we recognised an exchange gain of £0.6m (H1 FY23: loss £0.2m)
which was predominantly due to the revaluation of Euro denominated bank debt
and working capital.
The tax charge was £6.8m (H1 FY23: £13.2m) with an effective tax rate of
26.4% (H1 FY23 22.8%) which is slightly higher than the UK corporate tax rate
of 25.0%, due mainly to non-UK tax rates and deferred tax on temporary
differences. The tax rate was higher than last year due to the increase in UK
tax rate from 19.0% to 25.0% on 1 April 2023.
Earnings per share was 1.9p (H1 FY23: 4.5p). The total number of diluted
shares is detailed in note 6 in the financial statements. The following table
summarises these EPS figures:
Unaudited H1 FY24 H1 FY23 % change
pence pence
Earnings per share Basic 1.9 4.5 -58%
Diluted 1.9 4.5 -58%
EPS and diluted EPS for the current and prior year are presented as the same
amount due to the minimal dilutive impact of share options on the total
diluted share number.
OPERATING CASH FLOW
£m (unaudited) H1 FY24 H1 FY23
EBITDA(1) 77.6 88.8
Increase in inventories (55.5) (120.9)
Increase in debtors (28.5) (7.2)
(Increase)/decrease in creditors (3.6) 27.7
Total change in net working capital (87.6) (100.4)
Share-based payments 1.9 3.0
Capital expenditure (16.3) (19.3)
Operating cash outflow(2) (24.4) (27.9)
Operating cash conversion(2) (31%) (31%)
1. EBITDA - Earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation and impairment.
2. Alternative Performance Measures as defined in the Glossary on
pages 29 and 30.
Operating cash outflow was £24.4m (H1 FY23: £27.9m) representing a cash
conversion of EBITDA of negative 31%, in line with H1 FY23.
Trade debtor days increased from 48 days to 53 days, primarily due to customer
mix with a higher proportion of EMEA debtors (with payment terms closer to 60
days) than America (with payment terms closer to 30 days).
Capex was £16.3m (H1 FY23: £19.3m) and represented 4.1% of revenue (H1 FY23:
4.6%). The breakdown in capex by category is as follows:
£m H1 FY24 H1 FY23
Retail stores 8.8 7.7
Supply Chain 0.1 3.2
IT/Tech 7.4 8.4
( ) 16.3 19.3
Net cash flow after interest
Net cash flow after interest costs is summarised below:
£m (unaudited) H1 FY24 H1 FY23
Operating cash flow(1) (24.4) (27.9)
Net interest paid (7.3) (2.1)
Payment of lease liabilities (25.3) (12.7)
Taxation (15.4) (14.1)
Free cash outflow (72.4) (56.8)
Repurchase of shares (20.4) -
Net revolving credit facility drawdown 25.0 -
Dividends paid (42.8) (42.8)
Net cash outflow (110.6) (99.6)
Opening cash 157.5 228.0
Net cash exchange translation (1.2) 4.6
Closing cash 45.7 133.0
1. Operating cash flow and free cash flow are Alternative
Performance Measures defined in the Glossary on pages 29 and 30.
Net interest paid was £7.3m, higher than H1 FY23 by £5.2m due to the timing
of interest payments and higher interest rates, which were partially offset by
higher interest receivables from cash investments. The increase in lease
liabilities was due mainly to the increased number of retail stores opened in
the period under lease arrangements and increased space across the DC network.
Funding and Leverage
The Group is funded by cash, bank debt and equity. Further details on the
capital structure and debt are given in note 9 of the interim financial
statements. The Group's bank debt is denominated in Euros to reflect the
excess Euros the Group generates from trading in Continental Europe to fund
interest costs (with USD revenue generated broadly funding USD purchase of
inventory and GBP generated broadly funding GBP related costs). The bank debt
falls due for repayment in full on 2 February 2026. The Group also has a
revolving credit facility of £200.0m which also expires on 2 February 2026
with £25.0m drawdown during the period (expected to be fully repaid before
this financial year end) and £5.1m utilised in relation to certain guarantee
arrangements primarily for landlord guarantees.
The group financing arrangements have a total net leverage covenant test every
six months. The total net leverage test is calculated with a full 12 months of
EBITDA and net debt being inclusive of IFRS 16 lease liabilities at the
balance sheet date. At 30 September 2023 the Group had total net leverage of
2.0 times (H1 FY23: 1.1x, FY23: 1.2x) giving us significant headroom against
our covenant test. If this was calculated using average cash throughout the
year, (reflecting the Groups intra-year cash swing) average gearing would be
approximately 1.7x.
Pensions
Dr Martens Airwair Group Limited and Airwair International Limited
(subsidiaries of the Group) operate a defined benefit pension scheme in the
UK, which was closed to new members in 2002, and provides both pensions in
retirement and death benefits to members. At the most recent triennial
valuation date (June 2022), on an actuarial funding valuation basis as agreed
with the Trustees, the scheme had assets with a value of £55.4m and estimated
future liabilities (technical provisions) of £48.5m, resulting in a surplus
of £6.9m.
A detailed description of all pension commitments, including the IAS 19
accounting valuation (which is prepared on a different valuation basis of
liabilities to the actuarial funding valuation basis, the latter being used to
agree with the pension trustees whether cash contributions are or are not
required to be made and the former being purely for accounting purposes), is
given in note 29 of the Group Annual Report. The surplus under the scheme is
not recognised as an asset benefitting the Group on the balance sheet on the
basis that the Group is unlikely to derive any economic benefits from that
surplus. At 30 September 2023 (H1 FY24), the scheme had assets of £43.6m (H1
FY23: £48.5, FY23: £49.5m).
The Group also operates a defined contribution scheme for its employees and
during the year the Group contributions to this scheme were £2.6m (H1 FY23:
£2.3m). At 30 September 2023, this scheme had assets of £25.1m (H1 FY23:
£19.9m).
BALANCE SHEET
£m (Unaudited) (Unaudited) (Audited)
30 September 2023 30 September 2022 31 March 2023
Freehold property 7.4 6.8 7.4
Right-of-use assets 195.0 133.9 144.1
Other fixed assets 81.8 65.3 78.8
Inventory 314.5 261.4 257.8
Debtors 119.8 113.9 92.2
Creditors(2) (132.8) (186.4) (133.7)
Working capital 301.5 188.9 216.3
Other(1) 13.2 13.6 5.2
Operating net assets 598.9 408.5 451.8
Goodwill 240.7 240.7 240.7
Cash 45.7 133.0 157.5
Bank debt(3) (317.5) (297.0) (296.8)
Unamortised bank fees 2.9 4.1 3.4
Lease liabilities (207.1) (142.8) (152.4)
Net assets 363.6 346.5 404.2
1. Other includes investments, deferred tax assets, income tax
assets, and provisions.
2. Include bank interest of £8.0m (Sep22: £3.3m, Mar23: £6.0m).
3. Includes drawdown of RCF of £25.0m
Net financing is summarised below:
£m (Unaudited) (Unaudited) (Audited)
30 September 2023 30 September 2022 31 March 2023
Bank debt - Term (292.5) (297.0) (296.8)
- RCF (25.0) - -
Cash 45.7 133.0 157.5
Net bank debt (271.8) (164.0) (139.3)
Lease liabilities (207.1) (142.8) (152.4)
Net financing (478.9) (306.8) (291.7)
Inventory
Given the high proportion of continuity products we sell, with four out of
five pairs being black and having a strong product margin structure, we have
minimal markdown risk below cost. Inventory levels are higher than optimal and
we plan to right-size inventory through the course of FY25.
(Unaudited) (Unaudited)
30 September 2023 30 September 2022
Inventory (£m) 314.5 261.4
Turn (x)(1) 1.2x 1.3x
Weeks cover(2) 45 40
1. Calculated as historic LTM COGS divided by inventory.
2. Calculated as 52 weeks divided by stock turn.
Equity of £363.6m can be analysed as follows:
(unaudited)
£m 30 September 2023
Share capital 9.9
Treasury shares (2.0)
Hedging reserve 0.8
Capital redemption reserve 0.1
Merger reserve (1,400.0)
Non-UK translation reserve 13.7
Retained earnings 1,741.1
Equity 363.6
Dr. Martens plc (the Company) has distributable reserves of £1,312.1m.
RETURNS TO SHAREHOLDERS
Our capital allocation philosophy guides our view of returns to shareholders
and usage of excess cash. The first priority for investment is into the
business and we will continue to invest in a targeted manner to support
long-term growth and resilience of the Group. This is mainly represented by
investment into marketing, logistics, people, systems and inventory. Beyond
this, our priority is to return excess cash to shareholders, through a regular
dividend and, when possible, further returns.
Dividends
The Board has approved and the Company has declared an interim dividend of
1.56p per share (H1 FY23: 1.56p). The interim dividend will be paid to
shareholders on the register as at 5 January 2024 with payment on 2 February
2024.
£m (unaudited) H1 FY24 H1 FY23 % change
Earnings 19.0 44.7 -57%
Equity dividends on ordinary shares declared and paid during the period:
Final dividend (declared and paid): 4.28p (H1 FY23: 4.28p) 42.8 42.8 -
Proposed dividends
(not recognised as a liability at H1 Sep 24 and H1 FY23)
Interim dividend: 1.56p (H1 FY23: 1.56p) 15.4 15.6 -1%
Payout ratio % 81% 35% 46pts
Share Buyback
On 14 July 2023 Dr. Martens plc commenced a share buyback programme of £50m.
Under the buyback programme shares are repurchased daily. All shares
repurchased during a given week are cancelled collectively the following week.
Treasury shares are a result of the timing delay between the repurchase and
cancellation of these shares.
During the period, the Group repurchased 13.9m shares and cancelled £18.9m of
shares (12.5m shares). The cash outflow was £20.4m. The average cost of
shares purchased was £1.50.
DETAILED GUIDANCE FOR FY24
· Net new own store openings to be at the top-end of previous
guidance; around 35
· Depreciation and amortisation to be around £70m, at the top end
of previous guidance
· Net finance costs of c.£30m, compared to previous guidance of
c.£25m, driven by higher interest rates and lower average cash than
previously expected
· Blended tax rate of c.26%
· Capital expenditure of around £50m, at the bottom end of the
previous guidance range of £50-£55m, due to timing of some project spend
· Operating cash conversion of around 80% of EBITDA, compared to
previous guidance of more than 100% as we now anticipate that our inventory
position with rightsize through the course of FY25
Principal risks
The Board has considered the principal risks and uncertainties which could
impact the Group over the remaining half of the financial year. This review
has highlighted an increase in macro-economic uncertainty since the FY2023
Annual Report and Accounts. The risk was previously embedded within 'Financial
Risks' but it will now be disclosed separately. The principal risks are
therefore summarised as follows: Macro-economic uncertainty; Brand and
product; Social and environmental; People, culture and change; Supply chain;
Information and cyber security; Financial; and Legal and compliance. These
are detailed on pages 56 to 59 of the 2023 Annual Report, a copy of which is
available on the Company's website at www.drmartensplc.com
(http://www.drmartensplc.com/) .
Consolidated Statement of Profit or Loss
For the six months ended 30 September 2023
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
Notes £m £m £m
Revenue 3 395.8 418.6 1,000.3
Cost of sales (140.9) (160.8) (382.2)
Gross profit 254.9 257.8 618.1
Selling and administrative expenses (214.6) (192.5) (441.9)
Finance income(3) 1.7 0.4 1.9
Finance expense(3) 4 (16.2) (7.8) (18.7)
Profit before tax 25.8 57.9 159.4
EBITDA(1) 3 77.6 88.8 245.0
Depreciation and amortisation(2) (37.9) (23.3) (54.2)
Impairment - - (3.9)
Exchange gains/(losses)(2) 0.6 (0.2) (10.7)
Net finance expense (14.5) (7.4) (16.8)
Profit before tax 25.8 57.9 159.4
Tax expense 5 (6.8) (13.2) (30.5)
Profit for the period 19.0 44.7 128.9
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
Earnings per share
Basic 6 1.9p 4.5p 12.9p
Diluted 6 1.9p 4.5p 12.9p
3. Alternative Performance Measure 'APM' as defined in the
Glossary on pages 29 and 30.
4. Exchange gains(losses) were previously combined with
depreciation and amortisation in Sep 22.
5. Finance income and expense were previously combined net in
Sep 22.
The results for the periods presented above are derived from continuing
operations and are entirely attributable to the owners of the Parent Company.
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Consolidated Statement of Comprehensive Income
For the six months ended 30 September 2023
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
Notes £m £m £m
Profit for the period 19.0 44.7 128.9
Other comprehensive income/(expense)
Items that may subsequently be reclassified to profit or loss
Currency translation differences 1.2 17.3 5.5
Cash flow hedges: Fair value movements in equity (0.7) - -
Cash flow hedges: Reclassified and reported in profit or loss 2.3 (3.9) (0.6)
Tax in relation to unexercised share options 5 (0.1) - -
Tax in relation to cash flow hedges 5 (0.3) - 0.2
2.4 13.4 5.1
Total comprehensive income for the period 21.4 58.1 134.0
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Consolidated Balance Sheet
As at 30 September 2023
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
Notes £m £m £m
Non-current assets
Intangible assets(1) 265.5 265.1 265.6
Property, plant and equipment 8 64.4 47.7 61.3
Right-of-use assets 8 195.0 133.9 144.1
Investments 1.0 - 1.0
Deferred tax assets 11.0 11.0 11.8
536.9 457.7 483.8
Current assets
Inventories 314.5 261.4 257.8
Trade and other receivables 121.6 111.9 93.0
Income tax assets 8.7 10.8 -
Derivative financial assets 1.0 6.5 0.5
Cash and cash equivalents 45.7 133.0 157.5
491.5 523.6 508.8
Total assets 1,028.4 981.3 992.6
Current liabilities
Trade and other payables (124.8) (183.1) (127.7)
Borrowings 9 (33.0) (3.3) (6.0)
Lease liabilities 12 (40.0) (25.1) (28.1)
Derivative financial liabilities (2.8) (3.6) (1.3)
Income tax payable (0.8) (3.8) (1.4)
(201.4) (218.9) (164.5)
Non-current liabilities
Borrowings(2) 9 (289.6) (292.9) (293.4)
Lease liabilities 12 (167.1) (117.7) (124.3)
Provisions 10 (4.9) (3.6) (4.4)
Derivative financial liabilities - (0.9) -
Deferred tax liabilities (1.8) (0.8) (1.8)
(463.4) (415.9) (423.9)
Total liabilities (664.8) (634.8) (588.4)
Net assets 363.6 346.5 404.2
Equity attributable to the owners of the Parent
Share capital 14 9.9 10.0 10.0
Treasury shares(3) 15 (2.0) - -
Hedging reserve 0.8 (4.0) (0.5)
Capital reserve - own shares - - -
Capital redemption reserve 0.1 - -
Merger reserve (1,400.0) (1,400.0) (1,400.0)
Foreign translation reserve 13.7 24.3 12.5
Retained earnings 1,741.1 1,716.2 1,782.2
Total equity 363.6 346.5 404.2
1. Included in intangible assets is goodwill of £240.7m Sep 22:
£240.7m, Mar 23: £240.7m).
2. Bank debt is net of £2.9m (Sep 22: £4.1m, Mar 23: £3.4m)
of unamortised bank fees.
3. On 14 July 2023 Dr. Martens plc announced a share buyback
programme. Treasury shares are a result of a timing delay between the
repurchase of shares under this programme, and the subsequent cancellation of
these shares.
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Consolidated Statement of Changes in Equity
For the six months ended 30 September 2023
Share capital Treasury shares(1) Hedging reserve Capital reserve - own shares Capital redemption reserve Merger reserve Foreign translation reserve Retained earnings Total equity
£m £m £m £m £m £m £m £m £m
At 31 March 2022 10.0 - (0.1) - - (1,400.0) 7.0 1,711.3 328.2
Comprehensive income -
Profit for the period - - - - - - - 44.7 44.7
Other comprehensive income/(expense) - - (3.9) - - - 17.3 - 13.4
Total comprehensive income/(expense) for the period - - (3.9) - - - 17.3 44.7 58.1
Dividends paid - - - - - - - (42.8) (42.8)
Share-based payments - - - - - - - 3.0 3.0
At 30 September 2022 10.0 - (4.0) - - (1,400.0) 24.3 1,716.2 346.5
Comprehensive income
Profit for the period - - - - - - - 84.2 84.2
Other comprehensive income/(expense) - - 3.5 - - - (11.8) - (8.3)
Total comprehensive income/(expense) for the period - 3.5 - - - (11.8) 84.2 75.9
-
Dividends paid - - - - - - - (15.6) (15.6)
Share-based payments - - - - - - - (2.6) (2.6)
At 31 March 2023 10.0 - (0.5) - - (1,400.0) 12.5 1,782.2 404.2
Comprehensive income
Profit for the period - - - - - - - 19.0 19.0
Other comprehensive income - - 1.3 - - - 1.2 (0.1) 2.4
Total comprehensive income for the period - - 1.3 - - - 1.2 18.9 21.4
Dividends paid - - - - - - - (42.8) (42.8)
Share-based payments - - - - - - - 1.9 1.9
Shares issued - - - - - - - - -
Repurchase of ordinary share capital - (20.9) - - - - - (0.2) (21.1)
Cancellation of repurchased ordinary share capital (0.1) 18.9 - - 0.1 - - (18.9) -
At 30 September 2023 9.9 (2.0) 0.8 - 0.1 (1,400.0) 13.7 1,741.1 363.6
1. On 14 July 2023 Dr. Martens plc announced a share buyback
programme. Treasury shares are a result of a timing delay between the
repurchase of shares under this programme, and the subsequent cancellation of
these shares.
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Consolidated Statement of Cash Flows
For the six months ended 30 September 2023
Notes Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Profit after taxation 19.0 44.7 128.9
Add back: income tax expense 5 6.8 13.2 30.5
finance income (1.7) (0.4) (1.9)
finance expense 16.2 7.8 18.7
depreciation, amortisation and impairment 37.9 23.3 58.1
net exchange (gains)/losses (0.6) 0.2 10.7
share-based payments charge 1.9 3.0 0.5
Increase in inventories (55.5) (120.9) (133.2)
Increase in trade and other receivables (28.5) (7.2) (6.6)
(Decrease)/increase in trade and other payables (3.6) 27.7 (6.1)
Change in net working capital (87.6) (100.4) (145.9)
Cash flows from operating activities
Cash (used in)/generated from operations (8.1) (8.6) 99.6
Taxation paid (15.4) (14.1) (22.3)
Cash (used in)/generated from operating activities (23.5) (22.7) 77.3
Cash flows from investing activities
Additions to intangible assets (4.5) (6.4) (11.8)
Additions to property, plant and equipment (11.8) (12.9) (39.6)
Finance income received 1.8 - 1.6
Capital contributions received for right-of-use assets - - 0.2
Purchase of equity investment - - (1.0)
Cash used in investing activities (14.5) (19.3) (50.6)
Cash flows from financing activities
Finance expense paid 4 (9.1) (2.1) (7.2)
Payment of lease interest 12 (4.6) (2.1) (4.8)
Payment of lease liabilities 12 (20.7) (10.6) (29.1)
Repurchase of shares 15 (20.4) - -
Revolving credit facility drawdown 30.0 - -
Revolving credit facility repayment (5.0) - -
Dividends paid 7 (42.8) (42.8) (58.4)
Cash used in financing activities (72.6) (57.6) (99.5)
Net decrease in cash and cash equivalents (110.6) (99.6) (72.8)
Cash and cash equivalents at beginning of the period 157.5 228.0 228.0
Effect of exchange on cash held (1.2) 4.6 2.3
Cash and cash equivalents at end of the period 45.7 133.0 157.5
The notes on pages 18 to 27 form part of these consolidated financial
statements.
Consolidated Non-GAAP Statement of Cash Flows
Notes Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
EBITDA(1) 3 77.6 88.8 245.0
Change in net working capital(2) (85.7) (97.4) (145.4)
Capital expenditure (16.3) (19.3) (51.2)
Operating cash flow(1) (24.4) (27.9) 48.4
Net interest paid (7.3) (2.1) (5.6)
Payment of lease liabilities and interest(3) 12 (25.3) (12.7) (33.9)
Taxation (15.4) (14.1) (22.3)
Purchase of equity investment - - (1.0)
Repurchase of shares 15 (20.4) - -
Net revolving credit facility drawdown 25.0 - -
Dividends paid 7 (42.8) (42.8) (58.4)
Net cash flow (110.6) (99.6) (72.8)
Opening cash 157.5 228.0 228.0
Net cash exchange (1.2) 4.6 2.3
Cash and cash equivalents at end of the period 45.7 133.0 157.5
1. Alternative Performance Measures as defined in the Glossary on pages 29 and
30.
2. Included in working capital are share-based payments.
3. Includes interest of £4.6m (Sep 22: £2.1m, Mar 23: £4.8m).
Notes to the Consolidated Interim Financial Statements
For the six months ended 30 September 2023
1. General information
Dr. Martens plc (the 'Company') is a public company limited by shares
incorporated in the United Kingdom, and registered and domiciled in England
and Wales, whose shares are traded on the London Stock Exchange. The Company's
registered office is: 28 Jamestown Road, Camden, London NW1 7BY. The principal
activity of the Company and its subsidiaries (together referred to as the
'Group') is the design, development, procurement, marketing, selling and
distribution of footwear, under the Dr. Martens brand.
2. Accounting policies
The principal accounting policies adopted in the preparation of the
Consolidated Interim Financial Statements are the same as those set out in the
Group's Annual Financial Statements for the year ended 31 March 2023 other
than for the areas noted below. The interim financial information is presented
in GBP and to the nearest million pounds (to one decimal place) unless
otherwise noted.
Taxation
As per the requirements of IAS 34 (Interim Financial Reporting) paragraph
16A9a), the estimated effective tax rate for the full year has been applied to
taxable profits.
Share buyback
Where the Company purchases any of its own equity instruments, for example,
pursuant to the share buyback programme, the consideration paid, including any
directly attributable incremental costs, is deducted from equity attributable
to the owners of the company. The repurchased shares are recognised as
treasury shares until the shares are cancelled. As at 30 September 2023, the
company still had control over whether the programme would continue and
therefore, no liability is recognised.
Basis of preparation
The condensed Consolidated Interim Financial Statements have been prepared in
accordance with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority, and with UK-adopted
International Accounting Standard (IAS) 34 "Interim Financial Reporting".
The interim results for the six months ended 30 September 2023 and the
comparatives for the six months ended 30 September 2022 are unaudited but have
been reviewed by the auditors. A copy of their review report has been included
at the end of this report.
The financial information for the year ended 31 March 2023 has been extracted
from the Group financial statements for that period and does not constitute
statutory accounts as defined in section 434 of the Companies Act. These
published financial statements were reported on by the auditors without
qualification or an emphasis of matter reference and did not include a
statement under section 498(2) or (3) of the Companies Act 2006 and have been
delivered to the Registrar of Companies.
The Consolidated Interim Financial Statements have been prepared under the
historical cost convention, except for derivative financial instruments and
pension scheme assets that have been measured at fair value.
In preparing the Consolidated Interim Financial Statements management has
considered the impact of climate change, particularly in the context of the
financial statements as a whole, in addition to disclosures included in the
Strategic Report of the Group financial statements for the year ended 31 March
2023. Climate change remains as an emerging risk and is not expected to have a
significant impact on the Group's going concern assessment to 31 March 2024.
Significant judgements and sources of estimation uncertainty
The Group's significant judgements and key sources of estimation uncertainty
are consistent with those disclosed in the Group's latest audited financial
statements.
Going concern
The interim consolidated financial information has been prepared on the going
concern basis. The Directors' assessment is based on detailed trading and cash
flow forecasts, including forecast liquidity and covenant compliance. The
period of management's assessment is a 16-month period from the date of the
signing of the consolidated financial statements (the going concern period) to
31 March 2025 and the going concern basis is dependent on the Group
maintaining adequate levels of resources to operate during the period.
The Directors also considered the Group's funding arrangements at 30 September
2023 with cash of £45.7m, available undrawn facilities of £171.7m and bullet
debt repayment of £292.5m not due until 2 February 2026.
FY24 started with a continuing challenging global macroeconomy and weak
consumer sentiment particularly in America. Global recovery remains slow with
growing divergences of impacts on our core markets making it a challenge to
return to pre-pandemic growth.
The first half of FY24 was a difficult trading environment particularly in
America with good DTC growth in a number of our core markets, particularly in
EMEA, resulting in DTC mix expansion +7%pts. There was strong ecommerce growth
in EMEA and APAC, with improved conversion and traffic growth. Retail growth
was led by maturing stores with continued footfall recovery in EMEA and APAC,
but footfall decline in America. We were encouraged to see that the underlying
core fundamentals of the DOCS strategy continued to be in line with
expectation. The H1 decline in revenue was mainly from lower wholesale with
planned volume reduction of etailers in EMEA, a decision not to renew China
distributor contract and lower wholesale revenues in America due to industry
wide destocking. Gross margins growth was supported by strong supply chain
savings of c.£10m with price increases finding inflation.
In EMEA inflation started to ease as a result of a decline of energy prices
and moderating inflationary pressures. Russia's ongoing aggression against
Ukraine however continues to pose risks and remains a source of uncertainty.
Mounting climate risks, illustrated by extreme weather conditions and
unprecedented wildfires and floods in the summer, also weigh on the outlook.
In America, the landscape continued to be increasingly uncertain with weak
consumer spending. The first half was also impacted by unseasonable warm
weather. The consumer in America is very cautious and we do not expect
significant improvement in the short/midterm, with a risk of customer
sentiment deteriorating further given the recent conflict in the Middle East.
In APAC the outlook remains more balanced with recovery from the pandemic slow
and gradual.
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
2. Accounting policies (continued)
Going concern (continued)
As a result, the Directors will maintain a cautious outlook through the second
half and beyond and will react appropriately to further developments and
associated risks (across ecommerce, retail and wholesale channels). The
Directors however remain confident in the long-term growth prospects, cash
generative nature of the business, and strong balance sheet, with low risk
from the higher than optimal inventory levels due the inventory profile of
core product (minimal mark down risk). The Group is operationally strong with
a long track record consistently generating profits and cash which is expected
to continue over the short and long term. The principal measure of future
strength is in relation to our brand and key metrics and brand survey together
with our economic strength gives confidence on our future growth prospects.
The Directors analyse the prospects of the Group by reference to its current
financial position, recent trading trends and momentum, detailed trading and
cashflow forecasts including forecast liquidity and covenant compliance,
strategy, economic model and the principal risks, monitoring a number of
consumer confidence metrics across all core markets. Detailed forecasts are
prepared and plans for the assessment period taking into account experiences
of trading through the period to September 2023, including the impact of the
continued current global economic uncertainty, high inflation on
profitability, and cash flow and covenant compliance.
As part of the going concern assessment, management have modelled, and the
Directors have reviewed a base case and a severe but plausible downside
scenario with no planned cost or working capital mitigation (including the
payment of dividends).
Our central planning assumptions in the base case are:
Micro:
· Store growth in key markets will continue to be led by traffic
recovery back towards pre Covid-19 levels, though America will have the
slowest recovery, with a step improvement in ecommerce awareness also
continuing in conjunction with new store openings
· Price increases do not materially impact demand and funds inflation
· Inventory to be right sized for forward demand through FY25
· All DCs and factories remain open and operational throughout the
year
Macro:
· No material change to the global political situation /war in
Ukraine/Middle East
· No material deterioration in climate risk with respect to extreme
weather
· Higher inflation to remain (with associated higher interest rates)
with no marked stepped improvement in consumer confidence in EMEA or America
The severe but plausible downside scenario includes a low base case, where
revenue and EBITDA have been reduced for risks and challenging trading
environment identified above, to reflect further weakening of consumer demand,
particularly America, with no mitigation (but includes dividend payments), and
a decline in both revenue and EBITDA in FY25 to reflect continuation of
weakened consumer demand.
Should this severe but plausible downside scenario occur then mitigating
actions could also be taken including, (but not limited to) cancellation of
pay awards, reduced capital expenditure and reduced marketing spend. Under
this scenario dividends could be maintained but would be reviewed if required.
In the severe but plausible downside scenario, the Group continues to have
satisfactory liquidity and significant covenant headroom throughout the
16-month period under review. A more extreme downside scenario is not
considered plausible.
In addition, a reverse stress test has been modelled to determine what could
break covenant compliance estimates and liquidity before any mitigating
actions. To model these reverse stress tests the impact on revenue of zero
covenant headroom and zero liquidity was calculated at the end of FY25 from
the base case. Under the covenant breach test, it is concluded that the
business could weather extreme growth reductions without mitigation, -33pts of
revenue growth in FY25 before covenants are breached. Similarly, the business
would have to experience -87pts revenue growth reduction in FY25 before zero
cash headroom is reached. Under both tests modelled, there were no mitigating
actions (including dividend payments) modelled and the resulting revenues
calculated and likelihood of occurring have been considered. The Directors
have assessed the likelihood of occurrence to be remote.
In adopting the going concern basis for preparing the consolidated financial
statements, the Directors have considered the business activities as well as
the principal risks and uncertainties faced by the business. Based on the
Group trading and cashflow forecasts, the Directors have reasonable
expectation that the Group has an adequate level of resources to continue in
operational existence during the period under review.
Adoption of new and revised standards
A number of new or amended standards became applicable for the current
reporting period. These standards, amendments or interpretations are not
expected to have a material impact on the Group in the current or future
reporting periods:
· Amendments to IAS 1 - Classification of liabilities as current, and
disclosure of accounting policies
· Amendments to IAS 8 - Definition of accounting estimates
· Amendments to IAS 12 - Deferred tax related to assets and
liabilities arising from a single transaction.
· Amendments to IAS 12 - Pillar two model rules
· Implementation of IFRS 17.
New standards and interpretations not yet applied
The following new or amended IFRS accounting standards, amendments and
interpretations are not yet adopted and it is expected that where applicable,
these standards and amendments will be adopted on each respective effective
date:
· Amendments to IAS 1 - Presentation of financial statements:
non-current liabilities with covenants
· Amendments to IFRS 16 - Leases on sale and leaseback
These standards, amendments or interpretations are not expected to have a
material impact on the Group in the current or future reporting periods.
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
3. Segmental Analysis
IFRS 8 'Operating Segments' requires operating segments to be determined by
the Group's internal reporting to the Chief Operating Decision Maker (CODM).
The CODM has been determined to be both the CEO and CFO, who receive
information on this basis of the Group's revenue in key geographical regions
based on the Group's management and internal reporting structure. The CODM
assesses the performance of geographical segments based on a measure of
revenue and EBITDA(2). To increase transparency the Group also includes
additional voluntary disclosure analysis of global revenue within different
operating channels. Included within EMEA is revenue attributable to Airwair
International Limited and Airwair Wholesale Limited, the principal UK trading
subsidiaries of Dr. Martens plc, with revenue from retail stores in
Continental Europe and wholesale and export customers, America revenue is
fully attributable to the USA and Canada, and APAC revenue is mainly
attributable to Japan, Australia, China, Hong Kong and South Korea. The types
of products from which each reportable segment derives its revenue are
consistent across all segments. The Group typically generates approximately
60% of total revenue in the second half reflecting the peak Q3 DTC trading
period and, as a result of the stronger gross margin structure of DTC compared
to wholesale, EBITDA margins are higher in the second half of the year.
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Revenue by geographical market(1)
EMEA 194.2 179.0 443.0
America 147.7 179.7 428.2
APAC 53.9 59.9 129.1
Total revenue 395.8 418.6 1,000.3
1. Revenue by geographical market represents revenue from
external customers, there is no inter-segment revenue.
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
EBITDA(2) by geographical market
EMEA 55.8 52.8 146.1
America 28.6 41.4 100.1
APAC 12.2 13.1 33.8
Support costs (19.0) (18.5) (35.0)
EBITDA(2) 77.6 88.8 245.0
Amortisation of intangibles (4.6) (3.4) (8.4)
Depreciation of property, plant and equipment (7.9) (6.3) (13.6)
Depreciation of right-of-use assets (25.4) (13.6) (32.2)
Impairment of property, plant and equipment - - (0.6)
Impairment of right-of use assets - - (3.3)
Exchange gains/(losses) 0.6 (0.2) (10.7)
Depreciation, amortisation, impairment & exchange gains/(losses) (37.3) (23.5) (68.8)
Finance income and expense (14.5) (7.4) (16.8)
Profit before tax 25.8 57.9 159.4
2. Alternative Performance Measure 'APM' as defined in the
Glossary on pages 29 and 30.
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Revenue by channel
Ecommerce 91.7 88.8 279.0
Retail 104.7 91.0 241.7
DTC 196.4 179.8 520.7
Wholesale 199.4 238.8 479.6
Total 395.8 418.6 1,000.3
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Non-current assets
EMEA(1) 163.2 125.5 143.3
America 105.4 68.4 72.6
APAC 16.6 12.1 15.4
Goodwill 240.7 240.7 240.7
Deferred tax 11.0 11.0 11.8
Total non-current assets 536.9 457.7 483.8
1. Included in the EMEA non-current assets is £83.8m (Sep 22:
£64.5m, Mar 23: £79.4m) in relation to the UK legal entities.
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
4. Finance expense
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Bank debt and other charges(1,2) 11.0 5.1 12.7
Interest on lease liabilities 4.6 2.1 4.8
Amortisation of bank loan issue costs 0.6 0.6 1.2
Total financing expense 16.2 7.8 18.7
1. Bank debt and charges and other interest charges were £11.0m
(Sep 22: £5.1m Mar 23: £12.7m), compared to interest paid in the period of
£9.1m (Sep 22: £2.1m; Mar 23 £7.2m), with the difference of £1.9m (Sep 22:
£3.0m; Mar 23: £5.5m) relating to timing of interest payments on the debt.
2. Interest income of £1.7m (Sep 22: £0.4m, Mar 23: £2.1m)
was previously included within 'Bank debt and charges'.
5. Tax expense
The Group calculates the period tax expense using the tax rate that would be
applicable to the expected total annual earnings. The major components of tax
expense in the Consolidated Statement of Profit or Loss are:
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Current tax
Current tax on UK profit for the period 5.5 10.5 28.1
Adjustment in respect of prior periods (0.2) 1.1 (1.7)
Current tax on overseas profits for the period 1.5 2.1 4.3
6.8 13.7 30.7
Deferred tax
Origination and reversal of temporary differences (0.1) (0.7) (1.0)
Adjustment in respect of prior periods 0.1 0.2 0.8
- (0.5) (0.2)
Total tax expense in the Consolidated Statement of Profit or Loss 6.8 13.2 30.5
Other Comprehensive Income
Tax in relation to unexercised share options 0.1 - -
Tax in relation to cash flow hedges 0.3 - (0.2)
Total tax expense in the Consolidated Statement of Comprehensive Income 7.2 13.2 30.3
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Factors affecting the tax expense for the period
Profit before tax 25.8 57.9 159.4
Profit before tax multiplied by standard rate of UK corporation tax of 25% 6.5 11.0 30.3
(Mar 23 and Sep 22: 19%)
Effects of:
Non-deductible expenses 0.4 0.1 0.2
Effect of change in UK tax rate - - 0.1
Share based payments (0.1) - 0.1
Difference in foreign tax rates 0.3 0.9 0.8
Other adjustments (0.2) (0.1) (0.1)
Adjustments in respect of prior periods(1) (0.1) 1.3 (0.9)
Total tax expense in the Consolidated Statement of Profit or Loss 6.8 13.2 30.5
Effective tax rate 26.4% 22.8% 19.1%
Other Comprehensive Income
Tax in relation to unexercised share options 0.1 - -
Tax in relation to cash flow hedges 0.3 - (0.2)
Total tax expense in the Consolidated Statement of Comprehensive Income 7.2 13.2 30.3
1. The adjustments in respect of prior periods are in relation
to current and deferred tax on temporary differences.
Factors that may affect future tax charges
The Group is within the scope of the OECD Pillar two model rules. Pillar two
legislation was recently substantively enacted in some of the territories in
which the Group operates and will come into effect in these territories from 1
January 2024. On 20 June 2023, Finance (No.2) Act 2023 was substantively
enacted in the UK, introducing a global minimum effective tax rate of 15%. The
legislation implements a domestic top-up tax and a multinational top-up tax,
effective for accounting periods starting on or after 31 December 2023. The
Group has applied the exception allowed by an amendment to IAS 12 to
recognising and disclosing information about deferred tax assets and
liabilities related to top-up income taxes.
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
6. Earnings per share
The calculation of basic earnings per share is based on the profit
attributable to ordinary shareholders of the Parent Company divided by the
weighted average number of ordinary shares in issue during the period.
Diluted earnings per share is calculated by dividing the profit for the period
attributable to ordinary equity holders of the Parent Company by the weighted
average number of ordinary shares in issue during the period plus the weighted
average number of ordinary shares that would be issued on the conversion of
all dilutive potential ordinary shares into ordinary shares.
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Profit after tax 19.0 44.7 128.9
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
No. No. No.
Weighted average number of shares for calculating basic earnings per share 998.8 1,000.3 1,000.5
(millions)
Potentially dilutive share awards (millions) 3.2 4.4 0.7
Weighted average number of shares for calculating diluted earnings per share 1,002.0 1,004.7 1,001.2
(millions)
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
Earnings per share
Basic earnings per share 1.9p 4.5p 12.9p
Diluted earnings per share 1.9p 4.5p 12.9p
During the 6 months to 30 September 2023 the Group repurchased 13.9m shares.
The cash outflow was £20.4m, with an additional £0.7m of accrued expenditure
at period end, resulting in a total cost of £21.1m (including transaction
costs of £0.2m) pursuant to the share buyback scheme that was announced on 14
July 2023.
7. Dividends
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Equity dividends on ordinary shares declared and paid during the period/year:
Final dividend paid for FY23: 4.28p (Sep 22 and Mar 23: 4.28p) 42.8 42.8 42.8
Interim dividend paid for FY24: nil (Sep 22: nil; Mar 23: 1.56p) - - 15.6
Total dividends paid during the period/year 42.8 42.8 58.4
Proposed dividends
(not recognised as a liability Sep 23, Sep 22 or Mar 23)
Interim dividend proposed of 1.56p (Sep 22: 1.56p, Mar 23: nil) 15.4 15.6 -
Final dividend proposed of nil (Sep 22: nil, Mar 23: 4.28p) - - 42.8
Total dividends proposed during the period/year 15.4 15.6 42.8
Dividends as a % of earnings 81% 35% 45%
Dividend per share
Interim dividend 1.56p 1.56p 1.56p
Final dividend - - 4.28p
Total dividend per share 1.56p 1.56p 5.84p
The Board has approved and the Company has declared an interim dividend of
1.56 pence per share (H1 FY23: 1.56 pence) equating to a 81% (H1 FY23: 35%)
earnings payout. The Dr. Martens plc International Share Incentive Plan Trust
has waived all dividends payable by the Company in respect of the ordinary
shares it holds. The interim dividend will be paid to shareholders on the
register as at 5 January 2024 with payment on 2 February 2024.
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
8. Property, plant and equipment and
right-of-use assets
Movements in property, plant and equipment since 31 March 2023 predominantly
relate to additions of £11.0m and depreciation charged of £7.9m.
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Net book value:
Freehold property and improvements 7.4 6.8 7.4
Leasehold improvements 41.5 33.8 37.6
Plant and machinery 12.0 3.9 12.8
Office equipment 3.5 3.2 3.5
64.4 47.7 61.3
Set out below are the carrying amounts of right-of-use assets recognised and
the movements during the period:
Right-of-use assets
£m
Cost or valuation
At 31 March 2022 159.5
Additions(1) 66.3
Reassessments of leases 5.5
Reclassification from intangible assets 0.2
Disposals (0.8)
Exchange 4.7
At 31 March 2023 235.4
Additions(1) 70.1
Reassessment of leases(2) 7.2
Exchange (2.9)
At 30 September 2023 309.8
Depreciation and impairment
At 31 March 2022 54.0
Charge for the period 32.2
Impairment(3) 3.3
Exchange 1.8
At 31 March 2023 91.3
Charge for the period 25.4
Exchange (1.9)
At 30 September 2023 114.8
Net book value
At 30 September 2023 195.0
At 31 March 2023 144.1
1. Additions include £0.8m of direct costs (Sep 22: £0.8m, Mar 23: £3.2m)
and £0.6m (Sep 22: £1.3m, Mar 23: £2.7m) in relation to costs of removal
and restoring.
2. Lease reassessments relate to measurement adjustments for rent reviews and
stores that have exercised lease breaks.
3. During FY23, impairment charge was mainly in relation to three stores in
the US where footfall recovery, in their locality, was weak, and they were
written down to £nil.
9. Borrowings
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Current
Revolving credit facility drawdown 25.0 - -
Bank interest 8.0 3.3 6.0
Borrowings 33.0 3.3 6.0
Lease liabilities 40.0 25.1 28.1
Total current 73.0 28.4 34.1
Non-current
Bank loans (net of unamortised bank fees)(2) 289.6 292.9 293.4
Lease liabilities 167.1 117.7 124.3
Total non-current 456.7 410.6 417.7
Total borrowings(1) 529.7 439.0 451.8
1. From total borrowings, only bank loans (excluding unamortised
bank fees) and the revolving credit facility drawdown and lease liabilities
are included in debt for bank loan covenant calculation purposes.
2. Bank debt is net of £2.9m (Sep 22: £4.1m, Mar 23: £3.4m)
of unamortised bank fees.
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
9. Borrowings (continued)
Analysis of bank loan:
Non-current bank loans (net of unamortised bank fees) 289.6 292.9 293.4
Add back unamortised bank fees 2.9 4.1 3.4
Total gross bank loan 292.5 297.0 296.8
On 29 January 2021, the Group entered into a Facilities Agreement comprising a
new term B loan facility of €337.5m (equivalent to £300.0m at that date)
and a new multi-currency revolving credit facility of £200.0m. These
facilities have a maturity date of 2 February 2026. Included within this
agreement is a committed ancillary facility of which £3.3m (Sep 22: £4.1m)
has been utilised primarily related to landlord bank guarantees.
At 30 September 2023 the Group had utilised £25.0m (Sep 22: £nil, Mar 23:
£nil) of drawn debt under the revolving credit facility to support short-term
working capital requirements.
The Group value of the bank loan as at 30 September 2023 (excluding
unamortised bank fees and accrued interest) of £292.5m (Sep 22: £297.0) is
£7.5m lower (Sep 22: £3.0m lower) than the amount borrowed on 29 January
2021 due to an appreciation of the sterling Euro exchange rate movement. The
Group's total gross bank borrowings (excluding lease liabilities) is
denominated in Euros and loan repayments will occur in February 2026.
10. Provisions
Provisions as at 30 September 2023 of £4.9m (31 March 2023: £4.4m) consist
of property provisions relating to the estimated repair and restoration costs
for retail stores at the end of the lease. The provisions are not discounted
for the time value of money as this is not considered materially different
from the current cost.
11. Financial instruments
IFRS 13 requires the classification of financial instruments measured at fair
value to be determined by reference to the source of inputs used to derive
fair value.
The fair values of all financial instruments, except for leases, in both
periods are materially equal to their carrying values. All financial
instruments are classified as amortised cost with the exception of
derivatives, cash amounts held within Money Market Funds, and investments in
equity instruments which are measured at fair value. Derivatives and Money
Market Funds are classified as Level 2 under the fair value hierarchy, and
investments in equity instruments as Level 3, which is consistent with that
defined in note 2.17 of the Group's consolidated financial statements for the
year ended 31 March 2023.
Unaudited
30 September 2023
Assets at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Assets as per Balance Sheet
Investments - 1.0 - 1.0
Trade and other receivables excluding prepayments and accrued income 110.5 - - 110.5
Derivative financial assets - Current - 1.0 - 1.0
Cash and cash equivalents 32.1 - 13.6(1) 45.7
142.6 2.0 13.6 158.2
1. A proportion of cash is invested in high-quality overnight money market
funds to mitigate concentration and counterparty risk.
Liabilities at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Liabilities as per Balance Sheet
Bank debt 289.6 - - 289.6
Borrowings - Current 33.0 - - 33.0
Lease liabilities - Current 40.0 - - 40.0
Lease liabilities - Non-current 167.1 - - 167.1
Derivative financial liabilities - Current - 2.8 - 2.8
Trade and other payables excluding non-financial liabilities (mainly tax and 110.5 - - 110.5
social security costs)
640.2 2.8 - 643.0
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
11. Financial instruments (continued)
Audited
31 March 2023
Assets at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Assets as per Balance Sheet
Investments - 1.0 - 1.0
Trade and other receivables excluding prepayments and accrued income - - 86.3
86.3
Derivative financial assets - Current - 0.5 - 0.5
Cash and cash equivalents 86.3 - 71.2(1) 157.5
172.6 1.5 71.2 245.3
1. A proportion of cash is invested in high-quality overnight money market
funds to mitigate concentration and counterparty risk.
Liabilities at amortised cost Fair value through other comprehensive income Fair value through profit or loss Total
£m £m £m £m
Liabilities as per Balance Sheet
Bank debt 293.4 - - 293.4
Bank interest - Current 6.0 - - 6.0
Lease liabilities - Current 28.1 - - 28.1
Lease liabilities - Non-current 124.3 - - 124.3
Derivative financial liabilities - Current - 1.3 - 1.3
Trade and other payables excluding non-financial liabilities (mainly tax and - - 115.7
social security costs)
115.7
567.5 1.3 - 568.8
12. Leases
Set out below are the carrying amounts of lease liabilities (included under
borrowings - lease liabilities) and the movements during the period:
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
At start of period 152.4 112.9 112.9
Additions 68.5 27.0 60.6
Reassessments 7.4 4.1 5.5
Disposals - (0.8) (0.8)
Interest expense (note 4) 4.6 2.1 4.8
Lease capital and interest repayments (25.3) (12.7) (33.9)
Exchange (0.5) 10.2 3.3
At end of period 207.1 142.8 152.4
Current 40.0 25.1 28.1
Non-current 167.1 117.7 124.3
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
12. Leases (continued)
The following amounts were recognised in the Statement of Profit or Loss:
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Depreciation expense of right-of-use assets 25.4 13.6 32.2
Interest expense on lease liabilities (note 5) 4.6 2.1 4.8
Expenses relating to short-term leases 0.3 0.6 1.3
Variable lease payments 1.1 0.8 2.8
Total operating expenses recognised in Statement of Profit or Loss 1.4 1.4 4.1
Total amount recognised in Statement of Profit or Loss 31.4 17.1 41.1
The Group operates its own retail stores via arm's length leasehold
arrangements and also leases one warehouse (in the UK) and its offices (apart
from one property which is freehold). At 30 September 2023, the average lease
term remaining across all property related leases to end of term was 4.9 years
(H1 FY23: 5.4 years), and 3.5 years (H1 FY23: 3.4 years) to tenant-only break.
The annual rent commitment was £47.8m (H1 FY23: £29.7m) and undiscounted
total lease commitment was £235.0m (H1 FY23: £161.4m), reducing to £167.4m
(H1 FY23: £100.4m) to lease break.
At 30 September 2023 the Group has right-of-use ('ROU') assets of £195.0m (H1
FY23: £133.9m) and lease liabilities of £207.1m (H1 FY23: £142.8m). This
includes 4 DC 3PL contracts that are within the scope of IFRS16.
13. Pensions
Defined contribution scheme
The Group operates a defined contribution pension scheme for its employees.
The Group's expenses in relation to this scheme were £2.6m for the six months
ended 30 September 2023 (Sep 22: £2.3m) and at 30 September 2023 £0.9m (Sep
22: £1.2m, Mar 23: £0.8m) remained payable to the pension fund.
Defined benefit scheme
Dr Martens Airwair Group Limited and Airwair International Limited operates a
pension arrangement called the Dr. Martens Airwair Group Pension Plan (the
Plan). The Plan has a defined benefit section that provides benefits based on
final salary and length of service on retirement, leaving service or death.
The defined benefit section closed to new members on 6 April 2002 and closed
to future accrual with effect from 31 January 2006.
The Plan is managed by a board of Trustees appointed in part by Airwair
International Limited and in part from elections by members of the Plan. The
Trustees have responsibility for obtaining valuations of the fund,
administering benefit payments and investing the Plan's assets. The Trustees
delegate some of these functions to their professional advisers where
appropriate.
The defined benefit section of the Plan is subject to the Statutory Funding
Objective under the Pensions Act 2004. A valuation of the Plan is carried out
at least once every three years to determine whether the Statutory Funding
Objective is met. The last valuation was carried out at 30 June 2022 which
confirmed that the Plan had sufficient assets to meet the Statutory Funding
Objective. The next valuation is due at 30 June 2025. The Statutory Funding
Objective does not currently impact on the recognition of the Plan in these
accounts.
During the period, no discretionary benefits were awarded. There were no Plan
amendments, settlements or curtailments during the period.
The weighted average duration of the defined benefit obligation is
approximately 12 years (Mar 23: 13 years). Around 50% of the undiscounted
benefits are due to be paid beyond 17 years' time, with the projected
actuarial cashflows declining to zero in about 70 years.
Effect of the Plan on Company's future cash flows
Airwair International Limited is required to agree a Schedule of Contributions
with the Trustees of the Plan following a valuation, which must be carried out
at least once every three years. Following the valuation of the Plan at 30
June 2022, a Schedule of Contributions was agreed under which Airwair
International Limited was not required to make any contributions to the
defined benefit section of the Plan (other than payments in respect of
administrative expenses). Accordingly, Airwair International Limited does not
expect to contribute to the defined benefit section of the Plan, although it
will continue to contribute to the defined contribution section in line with
the Schedule of Contributions. The next valuation of the Plan is due at 30
June 2025. If this reveals a deficit then Airwair International Limited may be
required to pay contributions to the Plan to repair the deficit over time.
The amounts recognised in the Balance Sheet are determined as follows:
Unaudited Unaudited Audited
30 September 30 September 31 March
2023 2022 2023
£m £m £m
Amounts recognised in the Balance Sheet
Fair value of plan assets - defined benefit section 43.6 48.5 49.5
Present value of funded obligations - defined benefit section (35.1) (35.9) (38.4)
Surplus of funded plans 8.5 12.6 11.1
Impact of asset ceiling (8.5) (12.6) (11.1)
Net pension asset - - -
Notes to the Consolidated Interim Financial Statements (continued)
For the six months ended 30 September 2023
13. Pensions (continued)
Although the Plan has a surplus, this is not recognised on the grounds that
Airwair International Limited is unlikely to derive any future economic
benefits from the surplus. As such, an asset ceiling has been applied to the
Balance Sheet, and the net surplus of £8.5m (Mar 23: £11.1m) has not been
recognised on the balance sheet. The net surplus has been restricted to £nil
(Mar 23: £nil).
14. Share Capital
Unaudited Unaudited Audited
six months ended six months ended year ended
30 September 30 September 31 March
2023 2022 2023
No. £ No. £ No. £
Authorised, called up and fully paid
Ordinary shares of £0.01 each 988,567,950 9,885,680 1,000,557,598 10,005,576 1,000,793,898 10,007,939
The movements in ordinary share capital during the half year ended 30
September 2023 were as follows:
Unaudited 30 September 2023
No. £m
As at 1 April 2023 1,000,793,898 10.0
Shares issued 250,751 -
Repurchase and cancellation of ordinary share capital (12,476,699) (0.1)
As at 30 September 2023 988,567,950 9.9
Unaudited 30 September 2022
No. No.
As at 1 April 2022 1,000,222,700 10.0
Shares issued 334,898 -
As at 30 September 2022 1,000,557,598 10.0
Audited 31 March 2023
No. £m
As at 1 April 2022 1,000,222,700 10.0
Shares issued 571,198 -
As at 31 March 2023 1,000,793,898 10.0
During the half year ended 30 September 2023 Dr. Martens plc repurchased 13.9m
ordinary shares for a cash outflow of £20.4m, with an additional £0.7m of
accrued expenditure at period end, resulting in a total cost of £21.1m,
including transaction costs of £0.2m, as part of a share repurchase programme
announced on 1 July 2023. All shares purchased were for cancellation, with
12.5m shares cancelled and 1.4m shares to be cancelled. The repurchased shares
represented 1.4% of ordinary share capital. The number of shares in issue is
reduced where shares are repurchased.
15. Treasury Shares
The movements in treasury shares held by the Company during the half year
ended 30 September 2023 were as follows:
Unaudited 30 September 2023
No. £m
As at 1 April 2023 110,000 -
Repurchase of shares for cancellation 13,880,002 20.9
Cancellation of shares (12,476,699) (18.9)
As at 30 September 2023 1,513,303 2.0
On 14 July 2023 Dr. Martens plc announced a share buyback programme. All
shares repurchased during a given week are cancelled collectively the
following week. Treasury shares are a result of the timing delay between the
repurchase and cancellation of these shares.
16. Related party transactions
The Group's related party transactions are with key management personnel and
other related parties as disclosed in the Group's Annual Report and Accounts
for the year to 31 March 2023. There have been no material changes to the
Group's related party transactions during the six months to 30 September 2023.
17. Post balance sheet events
The Group has continued with the repurchase and cancellation of shares in line
with the share buyback programme that was announced on 14 July 2023.
First half / second half financial summary
H1 H2 FY
Unaudited Unaudited Unaudited Audited
FY24 FY23 Variance FY23 FY23
£m £m % £m £m
Revenue by channel:
Ecommerce 91.7 88.8 3% 190.2 279.0
Retail 104.7 91.0 15% 150.7 241.7
DTC 196.4 179.8 9% 340.9 520.7
Wholesale(3) 199.4 238.8 (17%) 240.8 479.6
395.8 418.6 (5%) 581.7 1,000.3
Gross profit 254.9 257.8 (1%) 360.3 618.1
EBITDA(1) 77.6 88.8 (13%) 156.2 245.0
Profit before tax 25.8 57.9 (55%) 101.5 159.4
Tax expense (6.8) (13.2) (48%) (17.3) (30.5)
Profit after tax 19.0 44.7 (57%) 84.2 128.9
Earnings per share
Basic 1.9p 4.5p (58%) 8.4p 12.9p
Diluted 1.9p 4.5p (58%) 8.4p 12.9p
Key statistics:
Pairs sold (m) 5.7 6.3 (9%) 7.5 13.8
No. of stores(2) 225 174 29% 204 204
DTC mix % 50% 43% +7pts 59% 52%
Gross margin % 64.4% 61.6% +2.8pts 61.9% 61.8%
EBITDA(1) % 19.6% 21.2% -1.6pts 26.9% 24.5%
Revenue by region:
EMEA 194.2 179.0 8% 264.0 443.0
America 147.7 179.7 (18%) 248.5 428.2
APAC 53.9 59.9 (10%) 69.2 129.1
395.8 418.6 (5%) 581.7 1,000.3
Revenue mix:
EMEA % 49% 43% +6pts 45% 44%
America % 37% 43% -6pts 43% 43%
APAC % 14% 14% - 12% 13%
EBITDA(1) by region:
EMEA 55.8 52.8 6% 93.3 146.1
America 28.6 41.4 (31%) 58.7 100.1
APAC 12.2 13.1 (7%) 20.7 33.8
Support costs (19.0) (18.5) (3%) (16.5) (35.0)
77.6 88.8 (13%) 156.2 245.0
EBITDA(1) margin:
EMEA 28.7% 29.5% -0.8 pts 35.3% 33.0%
America 19.4% 23.0% -3.6 pts 23.6% 23.4%
APAC 22.6% 21.9% +0.7 pts 29.9% 26.2%
Total 19.6% 21.2% -1.6pts 26.9% 24.5%
1. EBITDA - earnings before exchange gains/losses, finance
income/expense, income tax, depreciation, amortisation, and impairment.
2. Own stores on streets and malls operated under leasehold
arrangements.
3. Wholesale revenue including distributor customers.
Glossary and Alternative Performance Measures (APMs)
The Group tracks a number of performance measures (KPIs) including Alternative
Performance Measures (APMs) in managing its business, which are not defined or
specified under the requirements of IFRS because they exclude amounts that are
included in, or include amounts that are excluded from, the most directly
comparable measures calculated and presented in accordance with IFRS or are
calculated using financial measures that are not calculated in accordance with
IFRS.
The Group believes that these APMs, which are not considered to be a
substitute for or superior to IFRS measures, provide stakeholders with
additional helpful information on the performance of the business. These
APMs are consistent with how the business performance is planned and reported
within the internal management reporting to the Board.
In FY23 the Group disclosed two measures relating to FY22 comparatives which
are now no longer relevant to the current or comparative period. The Group is
no longer presenting free cash flow as this measure is no longer discussed as
a performance measure for the group. Discussed in its place, and considered
more relevant, are the other cash flow related performance measures included
in the glossary below. The Group is also no longer presenting underlying EPS.
In previous years this metric was introduced to present existing performance
measures exclusive of exceptional costs and preference share interest. The
Group recognised £nil exceptional costs and £nil preference share interest
in HY24, FY23 and FY22, and as such, this adjustment measure is no longer
relevant.
These APMs should be viewed as supplemental to, but not as a substitute for,
measures presented in the consolidated financial statements relating to the
Group, which are prepared in accordance with IFRS. The Group believes that
these APMs are useful indicators of its performance. However, they may not
be comparable with similarly titled measures reported by other companies due
to differences in the way they are calculated.
Metric Definition Rationale APM KPI
Revenue Revenue per financial statements Helps evaluate growth trends, establish budgets and assess operational No Yes
performance and efficiencies
Revenue by geographical market Revenue per Group's geographical segments Helps evaluate growth trends, establish budgets and assess operational No Yes
performance and efficiencies
Revenue: EMEA
Revenue: America
Revenue: APAC
Revenue by channel Helps evaluate growth trends, establish budgets and assess operational No Yes
performance and efficiencies
Revenue: ecommerce Revenue from Group's ecommerce platforms
Revenue: retail Revenue from Group's own stores (including concessions)
Revenue: DTC Revenue from the Group's direct-to-consumer (DTC) channel (= ecommerce plus
retail revenue)
Revenue: wholesale Revenue from the Group's business-to-business channel, revenue to wholesale
customers, distributors and franchisees
Constant currency basis Non-GBP results with the same exchange rate applied to the current and prior Presenting results of the Group excluding exchange volatility No No
periods, based on the current budgeted rates
Gross margin Revenue less cost of sales (raw materials and consumables) Helps evaluate growth trends, establish budgets and assess operational No No
performance and efficiencies
Cost of sales is disclosed in the Consolidated Statement of Profit or Loss
Gross margin % Gross margin divided by revenue Helps evaluate growth trends, establish budgets and assess operational Yes No
performance and efficiencies
Opex Selling and administrative expenses and finance expenses less depreciation, Opex is used to reconcile between gross margin and EBITDA Yes No
amortisation, impairment, exchange gains/(losses) and finance income/(expense)
EBITDA Profit/(loss) for the year/period before income tax expense, financing EBITDA is used as a key profit measure because it shows the results of normal, Yes Yes
income/(expense), exchange gains/(losses), depreciation of right-of-use core operations exclusive of income or charges that are not considered to
assets, depreciation, amortisation, impairment and exceptional items. represent the underlying operational performance
Exceptional items are material items that are considered exceptional in nature
by virtue of their size and/or incidence
Glossary and Alternative Performance Measures (APMs) (continued)
Metric Definition Rationale APM KPI
EBITDA % EBITDA divided by revenue Helps evaluate growth trends, establish budgets and assess operational Yes Yes
performance and efficiencies
Operating cash flow EBITDA less change in net working capital, IFRS2 share-based payment expense Operating cash flow is used as a trading cash generation measure because it Yes Yes
and capital expenditure shows the results of normal, core operations exclusive of income or charges
that are not considered to represent the underlying operational performance
Operating cash flow conversion Operating cash flow divided by EBITDA Used to evaluate the efficiency of a company's operations and its ability to Yes Yes
employ its earnings toward repayment of debt, capital expenditure and working
capital requirements
Consolidated non-GAAP Statement of Cash Flows Movement in cash flows from EBITDA To aid the understanding of the reader of the accounts of how the Group's cash Yes No
and cash equivalents changed during the period, including cash inflows and
outflows in the period
Earnings per share IFRS measure This indicates how much money a company makes for each share of its stock, No Yes
and is a widely used metric to estimate company value
No Yes
No No
Basic earnings per share The calculation of earnings per ordinary share is based on earnings after tax A higher EPS indicates greater value because investors will pay more for a
and the weighted average number of ordinary shares in issue during the company's
period/year
shares if they think the company has higher profits relative to
its share price
Diluted earnings per share Calculated by dividing the profit attributable to ordinary equity holders of Used to gauge the quality of EPS if all convertible securities were
the parent by the weighted average number of ordinary shares in issue during exercised
the period/year plus the weighted average number of ordinary shares that would
have been issued on the conversion of all dilutive potential ordinary shares
into ordinary shares and adjusted for (increased) for any interest or dividend
in respect of the dilutive potential ordinary shares.
Ecommerce mix % Ecommerce revenue as a percentage of total revenue Helps evaluate progress towards strategic objectives No Yes
DTC mix % DTC revenue as a percentage of total revenue Helps evaluate progress towards strategic objectives No Yes
Net finance expense The net expense when finance income and finance expense are combined. Shows the total net financing costs to the Group. Yes No
No. of stores Number of 'own' stores open in the Group Helps evaluate progress towards strategic objectives No Yes
Pairs Pairs of footwear sold during a period Used to show volumes and growths in the Group No Yes
Company Information
Shareholders' enquiries
Any shareholder with enquiries relating to their shareholding should, in the
first instance, contact our registrar, Equiniti, using the telephone number or
address on this page.
Electronic shareholder communications
Shareholders can elect to receive communications by email each time the
Company distributes documents, instead of receiving paper copies. This can be
done by registering via Shareview at no extra cost, at www.shareview.co.uk. In
the event that you change your mind or require a paper version of any document
in the future, please contact the registrar.
Access to Shareview allows shareholders to view details about their holdings,
submit a proxy vote for shareholder meetings and notify a change of address.
In addition to this, shareholders have the opportunity to complete dividend
mandates online which facilitates the payment of dividends directly into a
nominated account.
Registered Office
28 Jamestown Road
Camden
London
NW1 7BY
Investor relations
investor.relations@drmartens.com
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Tel: 0371 384 2030 (from the UK)
Tel: +44 121 4157047 (from overseas)
Independent auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Tel: +44 (0) 20 7583 5000
Statement of directors' responsibilities
The directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during
the first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
• material related-party transactions in the first six months
and any material changes in the related-party transactions described in the
last annual report.
The directors of Dr. Martens plc are listed in the Dr. Martens plc annual
report for 31 March 2023. A list of current directors is maintained on the Dr.
Martens plc website: www.drmartensplc.com.
By order of the board
Jon Mortimore, CFO
29 November 2023
Independent review report to Dr. Martens plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Dr. Martens plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Interim results of Dr.
Martens plc for the 6 month period ended 30 September 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Consolidated Balance Sheet as at 30 September 2023;
· the Consolidated Statement of Profit or Loss and the Consolidated
Statement of Comprehensive Income for the period then ended;
· the Consolidated Statement of Cash Flows for the period then
ended;
· the Consolidated Statement of Changes in Equity for the period
then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim results of Dr.
Martens plc have been prepared in accordance with UK adopted International
Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Interim results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
29 November 2023
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